There is nothing wrong with being frugal, but when it crosses over to becoming miserly it can hurt maximizing investment potentials.

When you look in the dictionary it is truly amazing how similar the definition for frugal and miserly are. But there is a distinction between the two. Being frugal is about monitoring your expenses and properly saving money. Being miserly is all about doing anything and everything to save money even at the expense of your own comfort and better living. In other words, being a miser will certainly keep you from losing your money but it will not help make it grow. And in the long-term due to things like rising inflation it will make you lose more in the end.

I personally feel someone who is a miser doesn’t realize it and in many respects it seems to be a psychological insecurity that makes them paranoid about not using money even in cases when it would be wisest to do so. If someone turns off the heat in the middle of winter and opts to wear his/her winter gloves and coat while indoors then that person is a miser.

It’s all about balance. You need to know how and when to save versus spending. Frugal people never pay to simply use their money. Meaning, if you had a car loan and was able to finance it for so many months at a set APR rate you would be flushing down the toilet all that interest you’d be paying out. A frugal person would realize this and would know to pay upfront and not finance it at all. A miser person wouldn’t even get a car.

In many respects more people need to be frugal because there are so many opportunities to maximize your money while still being able to spend economically. For example, cash back rewards of credit cards is a another benefit frugal people make full use of. Frugal people are happy and content because they don’t chase fads but learn through experience what the best ways are to make the most and exploit what they have.

With so many people in such high debt through loans and credit cards it seems like we need to institute mandatory school classes for our children to teach them about better spending habits and learning to live with what we need, not what we want.